Primoris Services Corporation Announces 2017 Third Quarter Financial Results
Board of Directors Increased Quarterly Cash Dividend to
Financial Highlights
- 2017 Q3 revenues of
$608.3 million , a 20% increase over 2016 Q3 - 2017 Q3 gross profit of
$70.4 million , a 40% increase over 2016 Q3 - 2017 Q3 net income attributable to Primoris of
$20.6 million , a$16.1 million (357%) increase over 2016 Q3. Earnings per share of$0.40 increased by$0.31 from 2016 Q3. - At
September 30, 2017 , total backlog of$2.6 billion
The Company also announced that on
"While hurricanes across the
2017 THIRD QUARTER RESULTS OVERVIEW
Revenues in the third quarter 2017 were
Selling, general, and administrative expenses in the 2017 third quarter were
Included in other income in the 2017 third quarter is
SEGMENT RESULTS
Through the end of the year 2016, Primoris segregated its business into three reportable segments: the Energy segment, the East Construction Services segment, and the West Construction Services segment. In the first quarter 2017, Primoris changed its reportable segments to match the changes in the Company's realigned internal organization and management structure. A Form 8-K was filed on
- Power,
Industrial, and Engineering ("Power") - The Power segment operates throughoutthe United States and specializes in a range of services that include full EPC project delivery, turnkey construction, retrofits, upgrades, repairs, outages, and maintenance for entities in the petroleum, petrochemical, water, and other industries. - Pipeline and Underground ("Pipeline") - The Pipeline segment operates throughout
the United States and specializes in a range of services, including pipeline construction, pipeline maintenance, pipeline facility work, compressor stations, pump stations, metering facilities, and other pipeline-related services for entities in the petroleum and petrochemical industries. - Utilities and Distribution ("Utilities") - The Utilities segment operates primarily in
California and the Midwest and Southeast regions ofthe United States and specializes in a range of services, including utility line installation and maintenance, gas and electric distribution, streetlight construction, substation work, and fiber optic cable installation. - Civil - The Civil segment operates primarily in the Southeast and
Gulf Coast regions ofthe United States and specializes in highway and bridge construction, airport runway and taxiway construction, demolition, heavy earthwork, soil stabilization, mass excavation, and drainage projects.
Segment Revenues
(in thousands, except %)
(Unaudited)
For the three months ended | |||||||||||
2017 | 2016 | ||||||||||
% of | % of | ||||||||||
Total | Total | ||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | |||||||
Power | $ | 154,178 | 25.3 | % | $ | 101,811 | 20.0 | % | |||
Pipeline | 84,357 | 13.9 | % | 106,042 | 20.9 | % | |||||
Utilities | 246,524 | 40.5 | % | 186,985 | 36.8 | % | |||||
Civil | 123,252 | 20.3 | % | 112,990 | 22.3 | % | |||||
Total | $ | 608,311 | 100.0 | % | $ | 507,828 | 100.0 | % |
For the nine months ended | |||||||||||
2017 | 2016 | ||||||||||
% of | % of | ||||||||||
Total | Total | ||||||||||
Segment | Revenue | Revenue | Revenue | Revenue | |||||||
Power | $ | 443,191 | 24.6 | % | $ | 367,025 | 26.3 | % | |||
Pipeline | 402,425 | 22.4 | % | 217,182 | 15.6 | % | |||||
Utilities | 576,446 | 32.0 | % | 447,858 | 32.1 | % | |||||
Civil | 378,916 | 21.0 | % | 363,020 | 26.0 | % | |||||
Total | $ | 1,800,978 | 100.0 | % | $ | 1,395,085 | 100.0 | % |
Segment Gross Profit
(in thousands, except %)
(Unaudited)
For the three months ended | ||||||||||||
2017 | 2016 | |||||||||||
% of | % of | |||||||||||
Gross | Segment | Gross | Segment | |||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||
Power | $ | 18,842 | 12.2 | % | $ | 10,893 | 10.7 | % | ||||
Pipeline | 12,084 | 14.3 | % | 32,402 | 30.6 | % | ||||||
Utilities | 36,081 | 14.6 | % | 33,925 | 18.1 | % | ||||||
Civil | 3,414 | 2.8 | % | (27,091 | ) | (24.0 | %) | |||||
Total | $ | 70,421 | 11.6 | % | $ | 50,129 | 9.9 | % | ||||
For the nine months ended | ||||||||||||
2017 | 2016 | |||||||||||
% of | % of | |||||||||||
Gross | Segment | Gross | Segment | |||||||||
Segment | Profit | Revenue | Profit | Revenue | ||||||||
Power | $ | 52,498 | 11.8 | % | $ | 36,570 | 10.0 | % | ||||
Pipeline | 79,575 | 19.8 | % | 43,870 | 20.2 | % | ||||||
Utilities | 76,701 | 13.3 | % | 68,651 | 15.3 | % | ||||||
Civil | 1,183 | 0.3 | % | (16,400 | ) | (4.5 | %) | |||||
Total | $ | 209,957 | 11.7 | % | $ | 132,691 | 9.5 | % | ||||
Power, Industrial, & Engineering Segment: Revenue in the Power segment increased by
Pipeline & Underground Segment: Revenue in the Pipeline segment decreased by
Utilities & Distribution Segment: Revenue in the Utilities segment increased by
Civil Segment: Revenue in the Civil segment increased by
OUTLOOK
Based on an expected second quarter 2018 start date for a major pipeline project in backlog, anticipated levels of customer maintenance, MSA spending, and new project awards, and given the continued uncertainty caused by the energy markets, the Company estimates that for the four quarters ending
BACKLOG
Backlog at | |||||||||
Segment | Fixed Backlog | MSA Backlog | Total Backlog | Expected Next Four Quarters Total Backlog Revenue Recognition | |||||
Power | $ | 418 | $ | 41 | $ | 459 | 78 | % | |
Pipeline | 808 | 43 | 851 | 55 | % | ||||
Utilities | 66 | 557 | 623 | 100 | % | ||||
Civil | 683 | - | 683 | 61 | % | ||||
Total | $ | 1,975 | $ | 641 | $ | 2,616 | 71 | % |
At
At
Total Backlog at
Backlog, including estimated MSA revenues, should not be considered a comprehensive indicator of future revenues. Revenue from certain projects, such as cost reimbursable and time-and-materials projects, do not flow through backlog. At any time, any project may be cancelled at the convenience of our customers.
CONFERENCE CALL
Interested parties may participate in the call by dialing:
- (877) 407-8293 (Domestic)
- (201) 689-8349 (International)
If you are unable to participate in the live call, a replay may be accessed by dialing (877) 660-6853, conference ID 13672829, and will be available for approximately two weeks. The conference call will also be broadcast live over the Internet and can be accessed and replayed through the Investor Relations section of Primoris' website at www.prim.com. Once at the Investor Relations section, please click on "Events & Presentations".
ABOUT PRIMORIS
Founded in 1960, Primoris, through various subsidiaries, has grown
to become one of the largest construction service enterprises in
FORWARD LOOKING STATEMENTS
This press release contains certain forward-looking statements, including with regard to the Company's future performance. Words such as "estimated," "believes," "expects," "projects," "may," and "future" or similar expressions are intended to identify forward-looking statements. Forward-looking statements inherently involve known and unknown risks, uncertainties, and other factors, including without limitation, those described in this
press release and those detailed in the "Risk Factors" section and other portions of our Annual Report on Form 10-K for the period ended
Company Contact
Executive Vice President, Chief Financial Officer
(214) 740-5602
pmoerbeek@prim.com
Director of Investor Relations
(214) 740-5615
ktholking@prim.com
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) (Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue | $ | 608,311 | $ | 507,828 | $ | 1,800,978 | $ | 1,395,085 | ||||||||
Cost of revenue | 537,890 | 457,699 | 1,591,021 | 1,262,394 | ||||||||||||
Gross profit | 70,421 | 50,129 | 209,957 | 132,691 | ||||||||||||
Selling, general and administrative expenses | 42,559 | 35,994 | 128,390 | 101,150 | ||||||||||||
Impairment of goodwill | — | 2,716 | — | 2,716 | ||||||||||||
Operating income | 27,862 | 11,419 | 81,567 | 28,825 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment income | 6,066 | — | 6,066 | — | ||||||||||||
Foreign exchange gain (loss) | 167 | (92 | ) | 299 | 288 | |||||||||||
Other expense | (39 | ) | (278 | ) | (52 | ) | (278 | ) | ||||||||
Interest income | 228 | 31 | 411 | 122 | ||||||||||||
Interest expense | (2,198 | ) | (2,246 | ) | (6,605 | ) | (6,754 | ) | ||||||||
Income before provision for income taxes | 32,086 | 8,834 | 81,686 | 22,203 | ||||||||||||
Provision for income taxes | (9,952 | ) | (4,078 | ) | (28,644 | ) | (9,244 | ) | ||||||||
Net income | $ | 22,134 | $ | 4,756 | $ | 53,042 | $ | 12,959 | ||||||||
Less net income attributable to noncontrolling interests | (1,537 | ) | (252 | ) | $ | (3,209 | ) | $ | (706 | ) | ||||||
Net income attributable to Primoris | $ | 20,597 | $ | 4,504 | $ | 49,833 | $ | 12,253 | ||||||||
Dividends per common share | $ | 0.055 | $ | 0.055 | $ | 0.17 | $ | 0.17 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.40 | $ | 0.09 | $ | 0.97 | $ | 0.24 | ||||||||
Diluted | $ | 0.40 | $ | 0.09 | $ | 0.96 | $ | 0.24 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 51,441 | 51,780 | 51,491 | 51,759 | ||||||||||||
Diluted | 51,707 | 52,034 | 51,751 | 51,978 | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) | ||||||
2017 | 2016 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 143,235 | $ | 135,823 | ||
Short-term investments | 19,304 | - | ||||
Customer retention deposits | 926 | 481 | ||||
Accounts receivable, net | 356,851 | 388,000 | ||||
Costs and estimated earnings in excess of billings | 177,662 | 138,618 | ||||
Inventory and uninstalled contract materials | 39,617 | 49,201 | ||||
Prepaid expenses and other current assets | 14,529 | 19,258 | ||||
Total current assets | 752,124 | 731,381 | ||||
Property and equipment, net | 305,046 | 277,346 | ||||
Intangible assets, net | 48,655 | 32,841 | ||||
151,118 | 127,226 | |||||
Other long-term assets | 4,749 | 2,004 | ||||
Total assets | $ | 1,261,692 | $ | 1,170,798 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 153,677 | $ | 168,110 | ||
Billings in excess of costs and estimated earnings | 159,120 | 112,606 | ||||
Accrued expenses and other current liabilities | 125,626 | 108,006 | ||||
Dividends payable | 2,829 | 2,839 | ||||
Current portion of capital leases | 214 | 188 | ||||
Current portion of long-term debt | 62,697 | 58,189 | ||||
Current portion of contingent earnout liabilities | 1,252 | — | ||||
Total current liabilities | 505,415 | 449,938 | ||||
Long-term capital leases, net of current portion | 245 | 15 | ||||
Long-term debt, net of current portion | 191,948 | 203,381 | ||||
Deferred tax liabilities | 9,830 | 9,830 | ||||
Other long-term liabilities | 13,007 | 9,064 | ||||
Total liabilities | 720,445 | 672,228 | ||||
Commitments and contingencies | ||||||
Stockholders' equity | ||||||
Common stock | 5 | 5 | ||||
Additional paid-in capital | 160,277 | 162,128 | ||||
Retained earnings | 376,537 | 335,218 | ||||
Non-controlling interest | 4,428 | 1,219 | ||||
Total stockholders' equity | 541,247 | 498,570 | ||||
Total liabilities and stockholders' equity | $ | 1,261,692 | $ | 1,170,798 | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) | ||||||||
Nine Months Ended | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 53,042 | $ | 12,959 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 43,064 | 46,430 | ||||||
Amortization of intangible assets | 6,184 | 5,015 | ||||||
477 | 2,716 | |||||||
Stock-based compensation expense | 911 | 1,169 | ||||||
Unrealized gain on short-term investments | (5,980 | ) | — | |||||
Gain on sale of property and equipment | (3,880 | ) | (3,361 | ) | ||||
Changes in assets and liabilities: | ||||||||
Customer retention deposits | (445 | ) | (451 | ) | ||||
Accounts receivable | 41,870 | 27,093 | ||||||
Costs and estimated earnings in excess of billings | (38,464 | ) | (39,936 | ) | ||||
Other current assets | 17,210 | 13,865 | ||||||
Other long-term assets | (2,745 | ) | (1,963 | ) | ||||
Accounts payable | (17,813 | ) | 10,036 | |||||
Billings in excess of costs and estimated earnings | 46,067 | (41,584 | ) | |||||
Accrued expenses and other current liabilities | 17,858 | 18,580 | ||||||
Other long-term liabilities | 4,076 | 49 | ||||||
Net cash provided by operating activities | 161,432 | 50,617 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (57,346 | ) | (52,137 | ) | ||||
Proceeds from sale of property and equipment | 7,027 | 7,763 | ||||||
Purchase of short-term investments | (13,588 | ) | — | |||||
Sale of short-term investments | 350 | — | ||||||
Cash paid for acquisitions | (66,205 | ) | (4,108 | ) | ||||
Net cash used in investing activities | (129,762 | ) | (48,482 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 30,000 | 30,000 | ||||||
Repayment of capital leases | (191 | ) | (626 | ) | ||||
Repayment of long-term debt | (41,088 | ) | (36,867 | ) | ||||
Payment of debt issuance costs for amended and restated credit agreement | (631 | ) | - | |||||
Proceeds from issuance of common stock purchased under a long-term incentive plan | 1,148 | 1,439 | ||||||
Repurchase of common stock | (4,999 | ) | — | |||||
Dividends paid | (8,497 | ) | (8,536 | ) | ||||
Net cash used in financing activities | (24,258 | ) | (14,590 | ) | ||||
Net change in cash and cash equivalents | 7,412 | (12,455 | ) | |||||
Cash and cash equivalents at beginning of the period | 135,823 | 161,122 | ||||||
Cash and cash equivalents at end of the period | $ | 143,235 | $ | 148,667 | ||||
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